UK inflation failed to rebound in May despite a sharp rise in fuel prices, according to data published by the Office for National Statistics on Wednesday.
The annual change in the consumer price index remained steady at 2.4 per cent in May, the same as in April. A poll by Thomson Reuters conducted before the data were released forecast that it would rise to 2.5 per cent.
The UK pound hit its day’s low after the release of the data. It was recently down 0.4 per cent against the US dollar at $1.3318.
Economists had expected that rising prices for crude oil would feed into higher transport costs for consumers, raising the level of inflation even as the boost to import prices from the fall in the pound following the EU referendum faded. Liquid fuel prices were up 37.1 per cent year on year in May, according to the ONS data.
However the price of recreational and cultural goods did not rise by as much as the previous year, lowering the headline rate of inflation. The ONS said that this was partly due to prices of video games.
“Prices for these games are heavily dependent on the composition of bestseller charts, often resulting in large overall price changes from month to month,” it said.
Meanwhile, prices of goods leaving factories were 2.9 per cent higher than a year ago, up from 2.5 per cent in April. Prices for materials and fuels were 9.2 per cent higher, up from 5.6 per cent, mainly reflecting the effect of higher oil prices.
House price data showed that the price of renting in London dropped on an annual basis for the first time since 2010. Rental prices were 0.2 per cent lower in May than a year before, prices in the rest of the UK were unchanged.
Head of inflation at the ONS Mike Hardie said:
Recent large rises in the cost of crude oil have fed through to prices paid by consumers at the pump. Air fares and ferry prices also contributed to the overall increase in inflation due to the timing of Easter. However, these effects have been partly offset by price falls in computer games and energy costs rising by less than this time last year.
“Annual house price growth continued to slow, with weak growth in London offset by increases in the South West and West Midlands. Nationally, rental prices remained unchanged, with rents in London falling on the year for the first time in nearly eight years.